Which One of the Following Statements Is Correct

question 24

Multiple Choice

Which one of the following statements is correct?

• A)Firms prefer to cut dividend payments rather than borrow money to fund a short-term cash need.
• B)Share repurchases tend to increase agency costs.
• C)Maintaining a steady dividend is a key goal of most dividend-paying firms.
• D)Tax rates are the key factor in determining a firm's dividend policy.
• E)Stock prices tend to ignore expected changes in dividend payments.

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Definitions:

Employer

An individual or organization that hires and pays people for their labor or services.

Form W-2

The tax form that an employer must send to an employee and the IRS at the end of the year. It reports an employee’s annual wages and the amount of taxes withheld from his or her paycheck.

Taxable Income

The portion of an individual's or corporation's income used to determine how much tax is owed to the government in a given tax year.

Taxes Withheld

The portion of an employee's wages that is not included in their paycheck because it is sent directly to the government as tax payments.